ABSTRACT
Contracts serve an important function: allocation of risks. When crises and unforeseen circumstances occur, the risk allocative function becomes paramount. In spite of its importance, the case law and legal doctrine are messy and inconsistent. This Article provides an overarching and a fresh look at excuse doctrines with a focus on force majeure clauses using empirical data and doctrinal analysis. Specifically, it investigates the purpose of force majeure clauses, courts’ primary focus, predictors of courts’ analysis and their relationship with the type of force majeure event (eg act of God or economic downturn) courts’ reasoning and case outcomes. Normatively, the Article proposes that the law should depart from its existing zero-sum outcome to a balanced approach premised on the relation between promisor’s ability to promisee’s degree of reliance. This Article has important implications for on-going litigations regarding contractual disputes arising out of the recent pandemic.
This Article employs several empirical methods including natural language processing, regression, bootstrapping, and hand coding to assess force majeure clauses. The results suggest that courts tend to apply the controllability test rather than discovering parties’ ex ante expectation …
Ghodoosi, Farshad, Contractual Allocation of Risks in Times of Crises: Computational and Normative Analyses of Force Majeure Clauses (December 4, 2020).
First posted 2020-12-08 06:23:05
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